Pedestrians fill the Church Street Marketplace in August 2012 as the outdoor walking mall celebrated its 30th anniversary. / FREE PRESS FILE

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Free Press Staff Writer

Justin Marsh, 9, (second from left) swims towards shore at the St. Albans Town beach with his brother, Brandon, 10, Bryan Corey, 9, and Ethan Bryce, 8, on Saturday, July 21, 2012. While the water in this part of St. Albans Bay is often too full of algae for swimming, this year the water has been relatively clear. 'It's great!' Justin Marsh says. The changing scene at the beach is one sign of the unpredictability of water quality in Lake Champlain. / CANDACE PAGE/FREE PRESS

What they mean

Gross Domestic Product (GDP), or at the state level, Gross State Product, is the total value of goods and services produced by an economy during one year. The Genuine Progress Indicator (GPI) is a composite number that includes net benefits of economic activity, with additions for household consumption and some other benefits not included in GDP (such as household work) and subtractions for some factors not explicitly accounted for by GDP, such as environmental depletion and underemployment. The Maryland GPI, after which Vermont’s is patterned, is a composite of 26 economic, environmental and social indicators.

Andy Paonessa of Heartwood Farm checks his buckets outside of his sugar house in East Albany in April. / FREE PRESS FILE

Graduates turn their tassels at the end of the University of Vermont commencement ceremony in Burlington on May 19. / FREE PRESS FILE

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In an era when just about every trapping of human existence can be assigned a metric or a rating, it’s only natural that the same should be true of the Big Picture: overall quality of life.

In other words, how are we doing, and how might that be measured?

These are questions that have engaged lots of people for a long time. One thing most probably could agree on is that there is no perfect way to measure a population’s well-being, however defined. But the measures keep coming, and a new one for Vermont is in the pipeline, thanks in part to the environmental movement.

One of the most commonly cited measures of “how we’re doing” is the annual Gross Domestic Product, a sum of the value of goods and services. While GDP per capita is not an explicit measure of well-being, per se, it’s often seen as a proxy quality-of-life index to the extent that it charts overall economic progress.

So, does a rising GDP mean a rising state of well-being? Not necessarily, say the GDP’s critics, of whom environmentalists are among the most vocal. If GDP goes up because we’re spending more to abate pollution, they say as an example, that doesn’t reflect an improvement in our quality of life.

The problem with standard economic accounting, in their view, is that the actual costs of environmental degradation or climate change are obscured or underplayed in statistics that are celebrated for bullish growth or “progress.” Is society really better off to the extent that it invests more and more to clean up air that’s increasingly not fit to breathe and water that’s increasingly unsuitable to drink?

The alliance of environmental activism and alternative economic thinking was showcased recently at the University of Vermont, site of the seventh biennial conference of the U.S. Society for Ecological Economics. And one of the topics that came in for attention was an alternative to GDP known as the Genuine Progress Indicator — an index, billed as a measure of a state’s well-being, that soon will make its debut here with the blessing of the Vermont Legislature.

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Sen. Anthony Pollina, D/P-Washington, chief sponsor of Vermont’s GPI legislation, told a session of the ecological economics conference devoted to GPI how he came to realize a new measure was needed.

“I was having my breakfast, and I opened up the newspaper, and there was an article that said Vermont had one of the strongest gross domestic products or gross state products of any state in the country,” he said. “So that seemed pretty good, that Vermont had such a strong economy.

“Then I turned the page,” he continued, “and it said hunger had increased by a third in the state over the last year. That got me thinking about the need for a different kind of indicator that would put us more in touch with reality.”

Quality measures

Alternative measures of collective well-being come in a variety of ... alternatives. Altogether, they’re manifestations of what’s known as the “Beyond GDP” movement.

Among them:

• The Human Development Index, a composite used by the U.N. Development Program that takes life expectancy and education into account in ranking nations.

• The Happy Planet Index, a creation of the New Economics Foundation, which aims to measure “the extent to which countries deliver long, happy, sustainable lives for the people that live in them.” The index, according to its website, is an efficiency measure that “ranks countries on how many long and happy lives they produce per unit of environmental input.”

• The Social Progress Index, which is promoted by Harvard Business School professor Michael Porter and an outfit called Social Progress Imperative, with an office in Washington, D.C. According to the organization’s website, the index “measures the extent to which countries provide for the social and environmental needs of their citizens” using 52 indicators.

• The Gross National Happiness index, which originated in Bhutan and which has gained adherents around the world, including Vermont. The name, coined by the Fourth King of Bhutan in 1972, plays off Gross National Product, a standard measure of economic activity that is deemed a poor measure of well-being. The index is compiled from 33 indicators that include data on governance quality, ecology and psychological health, among other domains.

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Vermonters with an appetite for homespun metrics can browse the Governor’s Dashboard, which was first posted Jan. 4 on the governor’s official website with the heading: “How are we doing? Click here for performance reports on Jobs, Economy, Environment and more.”

Numeric measures in 12 topic areas are set forth, each labeled with an color-coded symbol: improving, maintaining, worsening or no rating.

“This is all about accountability,” Shumlin was quoted as saying at a news conference announcing both the dashboard and a new website with data regarding revenues and expenditures.

The dashboard’s overall picture is fairly rosy. Of 71 metrics displayed June 24, 36 were “improving,” 20 were “maintaining,” five were “worsening” and 10 had no rating. All six environmental metrics — greenhouse gas, current use, forest cover, solid waste, renewables, CO2 per capita — were “improving.”

Soon to come is the Vermont Genuine Progress Indicator, commissioned by the Legislature and welcomed by the governor. Vermont’s version, developed by the Gund Institute for Ecological Economics at UVM, uses the same methodology that produced a GPI for Maryland, the first state to embrace the new benchmark. Maryland’s GPI is a composite of 26 economic, environmental and social indicators and is based on work done previously at Gund. The unveiling of Vermont’s GPI is scheduled for late July.

As the Gund Institute explains in a primer on its website, the GPI “measures the total net benefits of economic activity,” in contrast to Gross Domestic Product, which tracks simply the value of goods and services. The GPI adds and subtracts various things the GDP ignores — such as the value of volunteer or household work (pluses) and environmental degradation and crime costs (negatives).

Sen. Jeannette White D-Windham, a co-sponsor the GPI legislation, cited the example of divorce. Under conventional accounting, divorce is an economic boon — more money spent on lawyers, and of course, “two sets of towels.” By that reckoning, she said, “Divorce is good. It doesn’t make any sense.”

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The GPI, by contrast, figures in the cost of family breakups, along with costs of commuting, motor vehicle crashes and environmental damage caused by economic activity that registers simply as a plus in conventional accounting.

“One of the things it tries to do is subtract loss of ecosystem services, as a debit in the ledger,” said Eric Zencey, a Gund fellow and coordinator of the Vermont GPI project. “So, you have economic growth, but what did you lose? If you develop that area, you’ve lost farmland or wetland. What was the value of that farmland per acre, that wetland per acre?”

When the GDP and GPI are calculated at the national level and plotted on graphs spanning several decades, the line for the GPI is the flatter one — suggesting that quality of life isn’t improving as fast as the other, conventional measure would suggest.

GPI has its critics, of course. Any composite index that purports to measure quality of life is a product of subjective judgments on which indicators will be used and how they’re weighted. Political conservatives, for example, might argue that income inequality — one of the seven economic indicators that go into Maryland’s GPI — should have no place in the index at all.

Even GPI’s critics concede that GDP isn’t perfect. Its flaws are well-known, said Art Woolf, associate professor of economics at UVM. On the other hand, he said, GDP per capita is a simple index that conveniently expresses a lot of complicated things and that also happens to be highly correlated with qualities people value, such as literacy and life span.

What for?

Fueling the conversation about “well-being” metrics in Vermont has been an organization called Gross National Happiness USA, founded by Vermonters who attended a 2008 conference on Gross National Happiness in Bhutan and came back eager to push the idea at home: using various well-being indicators to help shape public policy in new ways. Gross National Happiness USA, said co-coordinator Linda Wheatley, is all about “getting people talking about what matters.”

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They held their own conference at Champlain College in 2010. The basic idea of developing a new gauge of well-being — shorn of the “happiness” tag, which invited some skepticism — caught on among legislators.

The result last year was Act 113, which, according to its summary, called for the Gund Institute to develop a Genuine Progress Indicator “to measure Vermont’s economic, environmental and societal well-being as a supplement to the measurement derived from the gross state product and other existing statistical measurements.” Gross National Happiness USA was “completely behind GPI,” Wheatley said.

What impact GPI will have on policy in Vermont is unclear. To the extent that it’s used for comparative purposes — from year to year, or between states — only time will tell. The initial Vermont GPI, expected to come out this summer, would serve as a baseline. Interest in developing the GPI is growing among states, but only a few besides Maryland are on board: Minnesota, Ohio, Oregon and Utah, according to Jon Erickson, Gund fellow and interim dean of the Rubenstein School of Environment and Natural Resources. Massachusetts has asked Gund to work on a GPI this summer, he said.

“We’re moving toward a New England comparison,” he said.

Although conventional gauges such as Gross Domestic Product or Gross State Product aren’t necessarily at the forefront of policymakers’ thinking, said Sen. Jane Kitchel, D-Caledonia, who chairs the Senate Appropriations Committee, “economic context has an important influence on the budget.”

The GPI, she said, “is a new way of looking at the state of well-being.”

“This is adding another dimension to the process,” she said. “The more information, the more data we’re able to measure on what we’re getting, the better.”

Rep. Suzi Wizowaty, D.-Burlington, one of the House co-sponsors, said that customarily at the Statehouse, “the bottom line is always the most superficial economic driver” in budget discussions. Consideration of the GPI, she said, might encourage more spending up front in such areas as education or job training, leading to better long-term outcomes.

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Sen. Anthony Pollina, a key legislative proponent of the GPI, made a similar point in remarks about the Vermont Legislature’s annual budget-balancing exercise. He was speaking at a session of the ecological economics conference devoted to the GPI.

“It’s easy to balance the budget. You just don’t put any money into cleaning up Lake Champlain, and you balance the budget. Or, you balance the budget by consciously underfunding our state colleges every year,” Pollina said. “You know what? Pollution doesn’t just go away because you’re not funding cleaning up Lake Champlain. Problems don’t get better when you ignore them. Problems get better when you make the investments, whether it’s infrastructure or education, to fix them.”

Unlike Maryland, where the GPI was developed by state employees at the initiative of the sitting governor, Vermont made the GPI a lasting fixture that, according to Pollina, will facilitate longer-range thinking.

“It was really important to me that we legislate it so that it would go beyond any particular governor who may or may not like the idea, and also because it takes a long time to get policy-makers used to doing something different,” he said.

“This idea that we were going to put together a GPI and make it useful right away — it’s a lot harder than that. What we need is long-term commitment to the GPI so that it sinks into people’s psyche and it becomes a part of the budget-making process.”